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We all have seen kids standing behind a card table selling lemonade. We think about how industrious these children are for getting into business at an early age. But is the lemonade stand really a good proving ground for the budding entrepreneur?

Here are the problems with the lemonade stand as a business enterprise:

1. No cost of goods or other expenses. When the parents provide the cups and lemonade, there is no cost to the kid entrepreneurs. In business, the cost of supplies are always purchased and typically need to be paid for up front. Whatever they sell, that money goes right to the bottom line and their pockets. This arrangement also avoids cash flow issues of having to pay for a product before it gets sold. The kid entrepreneurs also live with their parents. Unlike real entrepreneurs, they have no living expenses they must meet. As a result, kid entrepreneurs can sell their product for 5 to 25 cents. Expenses push this price much higher for a real business owner.

2. Free labor and rent. Kid entrepreneurs work for free. There is no opportunity cost because they are not giving up another paid opportunity to sell at the lemonade stand. Real entrepreneurs always have choices and need to make the most of their time. Wherever the stand is placed on, they are not paying rent to be there. For every other real entrepreneur, retail location is never free.

3. The love factor. Some customers buy because they are thirsty, but most buy because they know the kids or they look cute.

What can we learn from the lemonade stand?

1. Initiative. These same kids could be playing video games, watching television or doing another activity. Instead, they set up a small business. They begin to think production, sales and marketing.

2. They want to earn money. They are getting involved in commerce and selling a product. They want to earn some money instead of just asking their parents for it. This plants the idea of economic freedom.

3. They work as a team. This may be with a brother and sister or a friend. They divide up the responsibilities and work together as one team to accomplish their goal. In this case, someone makes the lemonade, another sells the product or makes the change. They need to divide up the profits (not always evenly) at the end.